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A new tactic to fight inflation in Bahrain would include increases in pension plans according to inflation rates, rather than the current three percent hike, which is "draining" the country's pension fund.

The system currently in use, according to Bahrain's Finance Minister Sheikh Ahmed bin Mohammed Al Khalifa, will soon be replaced by one which pegs pension increases to inflation, reported <i>Gulf Daily News</i>.

"We are suggesting a new system for rises and that's according to the rise in inflation levels," Shaikh Ahmed said.

"The current system is draining the Pension Fund Commission (PFC)," he added.

The minister revealed that Bahrain's pension payments will likely increase by 50 percent from BD8 million in 2004 to BD12 million by the end of next year.